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(O)viljan att förebygga naturolyckor- En studie av kommunalt ansvar och statlig ersättning vid naturolyckor i Sverige

Boklund, Karthika LU (2011) NEKM01 20111
Department of Economics
Abstract
The economic consequences of nature disasters are difficult to predict, and therefore complex to insure against. Some countries have established catastrophe funds, which aim to protect their citizens against losses. Sweden does not have such a system, and currently compensates its citizens and municipalities on a case by case basis. With a focus on Swedish municipalities, this essay investigates the system for compensation of losses incurred from nature disasters, and discusses whether the system works as an incentive for undertaking measures in disaster risk reduction and prevention.

This qualitative study uses the Principal -agent theory as an analytical tool for illustrating and discussing the relationship between the government and... (More)
The economic consequences of nature disasters are difficult to predict, and therefore complex to insure against. Some countries have established catastrophe funds, which aim to protect their citizens against losses. Sweden does not have such a system, and currently compensates its citizens and municipalities on a case by case basis. With a focus on Swedish municipalities, this essay investigates the system for compensation of losses incurred from nature disasters, and discusses whether the system works as an incentive for undertaking measures in disaster risk reduction and prevention.

This qualitative study uses the Principal -agent theory as an analytical tool for illustrating and discussing the relationship between the government and the municipalities, in regards to the current compensation system. Due to information asymmetries, the theory expects the municipalities to shirk on effort, a behavior that impedes disaster prevention and increases costs. With the economic assumption that decision making is based on the principle of maximizing utility, this essay investigates the capabilities and motives of the municipalities in undertaking nature disaster reduction and prevention. The empirical material consists primarily of interviews with representatives from seven municipalities.

The result shows that there are information asymmetries within the Swedish compensation system, which have enabled ex-post moral hazard. However it is inconclusive whether there has been ex-ante moral hazard, in terms of under-investing in disaster prevention measures. Beyond the assumptions of the theoretical framework, politicians’ interest was stressed to have an impact on the municipalities’ capabilities and motives to undertake disaster risk reduction. Since the willingness to undertake disaster risk reduction varies among municipalities, public crisis management in Sweden should attempt to increase national and local interest in disaster prevention measures. (Less)
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author
Boklund, Karthika LU
supervisor
organization
course
NEKM01 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
Ersättning, kommuner, informationsasymmetri, moral hazard, försäkring, naturolyckor, Principal-agent teori
language
Swedish
id
1982477
date added to LUP
2011-06-27 11:45:41
date last changed
2011-06-27 11:45:41
@misc{1982477,
  abstract     = {The economic consequences of nature disasters are difficult to predict, and therefore complex to insure against. Some countries have established catastrophe funds, which aim to protect their citizens against losses. Sweden does not have such a system, and currently compensates its citizens and municipalities on a case by case basis. With a focus on Swedish municipalities, this essay investigates the system for compensation of losses incurred from nature disasters, and discusses whether the system works as an incentive for undertaking measures in disaster risk reduction and prevention. 

This qualitative study uses the Principal -agent theory as an analytical tool for illustrating and discussing the relationship between the government and the municipalities, in regards to the current compensation system. Due to information asymmetries, the theory expects the municipalities to shirk on effort, a behavior that impedes disaster prevention and increases costs. With the economic assumption that decision making is based on the principle of maximizing utility, this essay investigates the capabilities and motives of the municipalities in undertaking nature disaster reduction and prevention. The empirical material consists primarily of interviews with representatives from seven municipalities. 

The result shows that there are information asymmetries within the Swedish compensation system, which have enabled ex-post moral hazard. However it is inconclusive whether there has been ex-ante moral hazard, in terms of under-investing in disaster prevention measures. Beyond the assumptions of the theoretical framework, politicians’ interest was stressed to have an impact on the municipalities’ capabilities and motives to undertake disaster risk reduction. Since the willingness to undertake disaster risk reduction varies among municipalities, public crisis management in Sweden should attempt to increase national and local interest in disaster prevention measures.},
  author       = {Boklund, Karthika},
  keyword      = {Ersättning,kommuner,informationsasymmetri,moral hazard,försäkring,naturolyckor,Principal-agent teori},
  language     = {swe},
  note         = {Student Paper},
  title        = {(O)viljan att förebygga naturolyckor- En studie av kommunalt ansvar och statlig ersättning vid naturolyckor i Sverige},
  year         = {2011},
}